The base of the pyramid
Out of the world's 6.6bn population, there are 4bn people who live on less than two dollars a day in the BoP. For more than 50 years the World Bank, national governments, aid and charity organisations have been working to eradicate poverty.
Universal access to Information and Communication Technologies (ICT) is defined as the ability for every person to connect regardless of their location or income. Simple low cost access to mobile phones has huge economic and social impacts; research conducted by Deloitte for the GSM Association has shown that an increase of just 10% of mobile penetration in a developing country will raise the economic growth rate by 1.2%.
The United Nations (UN) Millennium Development Goals form a blueprint agreed by the world's economies to meet the needs of the world's poorest by 2015. One of these goals is make available technology to eliminate the 'digital divide' which exists today where people at the base of the pyramid cannot afford to access, or live beyond the coverage of existing services.
Cost of access
The cost of handsets, high taxes and the physical cost of supplying mobile services by the local service provider create a barrier to entry for those people earning less than $2 a day.
Industrial companies have been striving to develop Ultra Low Cost Handsets (ULCH) below $30 per unit, however the cost is still beyond much those people who earn less than two dollars a day. In these markets, operators find it difficult to even provide a SIM card, without a handset, and still make a profit.
Extention of coverage
Low connection costs are not enough, mobile operators also need to be able to roll out coverage into rural areas. Reduced footprints for Base Stations, the introduction of new transmission and power technologies such as solar power and the use of bio fuels, enables service providers to roll out mobile coverage into rural areas.
Where is this market
If you correlate poverty data against low mobile penetration you can see that this market is predominately Africa and Asia Pacific but also in parts of Middle East and Latin America.
How big is this market
There are 1.6bn people who live on incomes between $2 and $1 a day, out of these people there are 1.3bn who are between the age of 10 and 69. Is it possible to buy a phone and use it on an income of $2 a day, however the market for phone services goes well below this limit. Not owning a mobile phone phone doesn't mean they don't use a mobile phone. In this segment few people will own a phone because of the high entry costs and network subscription rates, and yet they will spend over 5% of GNI per Capita on phone services. Market dynamics vary considerably by country but people will use public payphones and share phones within a household, with neighbors and friends at work.
Africa
Demand for mobile phone services in Africa is the last few years has been more than expected and continues to expand. It is the demand from rural, low income areas that have exceeded expectations. Demand is for basic voice, as opposed data or value added services. Social uses such as keeping in touch with family and friends features strongly.
South Asia
In India and Bangladesh rural areas are becoming connected and fierce competition is driving down technology prices, Indians enjoy the lowest call costs in the world. The rollout of mobile phones is being used as a catalyst to improve access to quality education, improve health standards and improve employment opportunities.
Latin America The Latin America market is characterised by people wanting to keep social ties and connect with people. The problem of extending the coverage of wireless communications remains high. In Latin America 24% of the population lives in rural areas. Demand is for coverage.